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The Impact of Foreign Direct Investments on Economic Growth in Transition Economies: Dynamic Panel Data Analysis

Author

Listed:
  • Ozcag, Mustafa

    (Aydin Adnan Menderes University)

  • Bozdaglioglu, E. Yasemin

    (Aydin Adnan Menderes University)

  • Kucukkaya, Hatice

    (Aydin Adnan Menderes University)

Abstract

In the transition economies, together with the transition process, positive developments in economic growth performances can be seen. In this study, the impact of foreign direct investment on the economic growth rates of 27 transition economies for the period 1997-2016 is modeled within the theories of neoclassical and endogenous growth. In order to investigate this effect in the framework of Neoclassical and endogenous growth theories, the human capital factor also plays an important role. For this reason, the relationship between foreign direct investment and economic growth for the specified period is tested with the estimators Arellano-Bond, Arellano-Bondmax and Arellano-Bond 2 Stage GMM (Generalized Method of Moments) which are current dynamic panel model estimators. Economic growth, human capital and trade volume variables are statistically significant and the coefficients are positive. The most striking result of working is; if foreign direct investment is supported by human capital growth, it will have much more impact on economic growth.

Suggested Citation

  • Ozcag, Mustafa & Bozdaglioglu, E. Yasemin & Kucukkaya, Hatice, 2019. "The Impact of Foreign Direct Investments on Economic Growth in Transition Economies: Dynamic Panel Data Analysis," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 10(1), pages 41-53, January.
    • Handle: RePEc:ris:buecrj:0376
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    More about this item

    Keywords

    Economic Growth; Transition Economies; Foreign Direct Investment; Dynamic Panel Data Analysis;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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